Sterling Bank has maintained a relatively healthy loan portfolio over the past decade, keeping its non-performing loan (NPL) ratio below the Central Bank of Nigeria's prudential benchmark even as the broader banking industry continues to grapple with worsening asset quality.
The bank's NPL ratio edged up only slightly from 4.80 per cent in the first quarter of 2016 to 4.93 per cent in the first quarter of 2026, remaining below the CBN's regulatory threshold of five per cent. The performance also compares favourably with the wider banking industry's NPL ratio, which ranged between eight and nine per cent during the first quarter of the year.
Industry data indicate that Nigerian banks have faced mounting pressure from rising bad loans following the withdrawal of regulatory forbearance and the reclassification of certain credit facilities.
According to the Central Bank of Nigeria's January 2026 Economic Report, the industry's non-performing loan ratio increased to 8.03 per cent in January 2026 from 7.51 per cent recorded in December 2025, reflecting a further deterioration in asset quality across the banking sector.
Despite the increase, the apex bank maintained that the financial system remained resilient, although it acknowledged the growing risks associated with rising bad loans.
The report stated:
"Following the bank's loan reclassification after the withdrawal of forbearance, the non-performing loans ratio rose by 0.52 percentage point to 8.03 per cent compared with the level in the preceding period and was above the 5.00 per cent prudential threshold."
The industry's asset quality deteriorated further in the following month, with the average non-performing loan ratio climbing to 9.85 per cent by February, underscoring the challenges banks continue to face in loan recovery and credit risk management.
The CBN warned that a sustained increase in bad loans could weaken banks' balance sheets, impair asset quality and pose broader risks to the stability of the financial system if left unchecked.
To address the trend, the regulator urged financial institutions to strengthen credit discipline and improve loan recovery mechanisms through wider implementation of the Global Standing Instruction (GSI) framework.
Specifically, the apex bank recommended deepening "the operational integration of the GSI framework across all financial institutions to enhance loan recovery efficiency and credit discipline."
The Global Standing Instruction allows lenders to recover overdue loans by debiting funds from borrowers' accounts held across participating financial institutions, a measure designed to improve repayment compliance and reduce credit defaults.
Sterling Bank's ability to keep its non-performing loan ratio below the regulatory ceiling amid industry-wide pressure highlights its relatively stronger asset quality management at a time when many banks are adjusting to tighter regulatory oversight and more challenging economic conditions.